Home/Finance/ Shock in Japan as Nissan's Ghosn held in financial probe

Shock in Japan as Nissan's Ghosn held in financial probe

Ellis Copeland |Tuesday, November 20, 2018

Nissan CEO Carlos Ghosn at 2016 New York Auto Show roundable discussion

Nissan said in a statement that it had been investigating Ghosn and another board member for months, and was now cooperating with Japanese prosecutors.

"Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly's deep involvement has also been confirmed".

As for Nissan, it's promising to continue to work with investigators as the full extent of Ghosn and Kelly's actions.

The company said it is co-operating with prosecutors' own investigation. They are accused of reporting only half of Ghosn's actual salary, of nearly 10 billion yen (£69m) over the period.

"By under-reporting his corporate salary, he basically deprived Nissan's shareholders of opportunities to judge if the amount of his salary was appropriate", Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan, said of Nissan's allegations.

Among the most prominent car-industry executives globally, Ghosn, 64, built the three-way union of Renault, Nissan and Mitsubishi Motors Corp.

"The initial share price reaction shows how pivotal he is", Citi analyst Raghav Gupta-Chaudhary said on Monday. He built his reputation as a turnaround specialist by bringing Nissan back from the brink - the stuff of legend in Japan, where Nissan's demise had been something of a national tragedy. "One of the things emphasised over and over at during Nissan's press conference was the individual power that Mr. Ghosn held and I think that's something Nissan and the Alliance will try to change in the future".

That, the Nissan CEO said, was "a dark side of the Ghosn era which lasted for a long time".

The Japanese automaker said it would remove Ghosn from his position as chairman, after uncovering that the former CEO had purposely under-reported his compensation to the Tokyo Stock Exchange and made personal use of company assets.

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Nissan's CEO Hiroto Saikawa said he would propose to the company's board that Ghosn and Kelly be removed from their positions at a meeting scheduled for Thursday.

A Brazilian-born French national, Ghosn was educated in Lebanon and in Paris before spending 18 years at tire maker Michelin, rising up the ranks to run its North American division.

He joined Nissan in 1999 after Renault bought a controlling stake and became its CEO from 2001 until 2017.

Ghosn has been at Nissan for 19 years.

Nissan, which called in the authorities after an audit inspired by a whistleblower, has refused to divulge the amounts involved in the spending claim though state broadcaster NHK said it included the purchase of homes for Mr Ghosn in four countries.

As auto markets in western Europe and Japan struggled, Ghosn championed a cheap car for the masses in emerging markets and embraced the electric vehicle before many others.

Saikawa insisted "the partnership among the three entities will not be affected by this event", but he was unable to give details on how Renault and Mitsubishi planned to respond, or who might succeed Ghosn.

Shareholders at Renault voted in 2016 against Ghosn's pay package, seeing it as too generous - but the board ignored the vote.

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